Jamie works as a makeup artist for several entertainment companies in Atlanta. For the past 3 years, she has provided makeup services for performers at Harmony Productions, a regional performing arts company. Harmony has always classified Jamie as an independent contractor. They do not withhold taxes, provide benefits, or allow her to unionize. Jamie sets her own schedule, brings her own makeup supplies, and works for other clients.
Recently, Jamie learned about the 2023 Atlanta Opera case, where the National Labor Relations Board (NLRB) ruled that makeup artists and other stagehands at the Atlanta Opera should be classified as employees, not independent contractors, making them eligible for unionization. The NLRB applied a new worker-friendly test that emphasized workers' entrepreneurial opportunity and their dependency on the employer.
Jamie and several other makeup artists are now considering challenging their classification at Harmony Productions, believing that they might qualify as employees under the new standards set by the Atlanta Opera case. Harmony insists that Jamie and her colleagues are true independent contractors who have significant control over their work and entrepreneurial opportunities.
Please read this article: Government Scrutiny of Gig Workers Is Misplaced.
Then, please discuss the following with your peers:
What key factors do you believe might determine whether Jamie should be classified as an employee or an independent contractor under the new standard?
What are the potential benefits and risks for gig workers who are reclassified as employees?
What broader implications might the Atlanta Opera case have for the gig economy and labor relations in the United States?
Sample Answer
The debate over classifying gig workers like Jamie is at the heart of modern labor law. The Atlanta Opera case signals a significant shift by the National Labor Relations Board (NLRB) toward a more worker-friendly standard, departing from traditional tests that focused heavily on control.
Here is a discussion of the factors determining classification, the implications of reclassification, and the broader impact of the Atlanta Opera case.
🔑 Factors Determining Jamie’s Classification
The NLRB's new standard, which places greater emphasis on entrepreneurial opportunity and economic dependency, will likely focus on the following factors to determine if Jamie and her colleagues are employees or independent contractors:
Entrepreneurial Opportunity (Key New Factor):
Investment: Does Jamie's investment in her business (e.g., expensive makeup kits, website, marketing) actually translate into a significant opportunity for independent profit or loss? If Harmony Productions provides most of the consistent work and controls the rates, her personal investment may be seen as necessary to perform the job, not to operate an independent business.
Market Independence: How free is Jamie to truly serve other clients? If Harmony's demands or schedule effectively prevent her from taking on substantial, diverse work, her "freedom" to work elsewhere is illusory.
Business Setup: Does Jamie have her own independent business brand that she builds and markets, or is she primarily known as a worker for Harmony Productions?
Economic Dependency:
Percentage of Income: What percentage of Jamie’s overall income comes from Harmony Productions? If she is highly dependent on Harmony for her livelihood, this strongly suggests an employee relationship, regardless of her work schedule flexibility.
Work Integral to Business: Is Jamie's makeup work central to Harmony's primary business (putting on performances)? In the Atlanta Opera case, the NLRB found that the stagehands' work was integral to the company's main operation, making them more likely to be employees.
Harmony's Control (Traditional Factor, Still Relevant):
Direction of Work: While Jamie sets her schedule, does Harmony control how the work is performed, such as specific artistic standards, required arrival/departure times, or specific looks for the performers? Control over the means and manner of work is a traditional indicator of employment.
Duration/Permanence: Providing services for 3 years is a long-term, permanent relationship, which leans toward an employee classification, as independent businesses typically have shorter, project-specific contracts.
💼 Benefits and Risks of Reclassification
Reclassifying gig workers as employees carries significant advantages and drawbacks for the workers themselves.
Potential Benefits (Gains)
Protection under the NLRA: As employees, Jamie and her colleagues become eligible for unionization and protection under the National Labor Relations Act (NLRA), giving them collective bargaining power for better wages and working conditions. (This was the core issue in the Atlanta Opera case).
Mandated Benefits: They gain access to employer-provided benefits, including employer contributions to Social Security and Medicare, unemployment insurance, workers' compensation insurance, and potentially health insurance and retirement plans.
Wage and Hour Laws: They would be subject to minimum wage and overtime pay requirements under the Fair Labor Standards Act (FLSA).
Potential Risks (Losses)
Loss of Flexibility: Employment status often comes with set hours, required availability, and less control over the work schedule, reducing the flexibility that many gig workers value.
Reduced Overall Income (Potentially): Companies may respond to the increased cost of employment (taxes, benefits) by hiring fewer people, reducing total working hours, or shifting to a lower hourly wage to offset benefit costs.
Loss of Entrepreneurial Freedom: Jamie would lose the ability to deduct many business expenses (e.g., her makeup supplies, marketing costs) that independent contractors can use to reduce their taxable income.